China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.

CEBM is also warning that Chinese exports and imports will decelerate in the third quarter and going forward.

This week's DTCC data [shows that] with a total of 456 million in net notional derisking, France was the top entity in which protection was sought in the past week. [For more on France see this.]

***

But what is probably most notable, is the sudden and dramatic appearance of China in the top 3rd position. Welcome China! And after tonight's surprise PMI miss [see this for details] and the resulting market drubbing, we are confident within a week or two, China will promptly become a mainstay of the top 3, and will quickly rise to the top position, where it rightfully belongs. We are also confident those perennial Eastern European underdogs, Romania and Bulgaria will shyly make an entrance in the top 10 next week.

***

Not shown on the table, but certainly in need of noting, was our very own state of California, which with 377 million in net derisking, was the 3rd most shorted entity of all. Is the last bastion of "all is well" propaganda about to fall?

And it must be noted that the Fed ignores any PhD economist who exercises any scintilla of independence.

For example, all of the PhD economists who say the economy won't recover unless we break up the giant banks are ignored (even if they happen to be former Federal Reserve chairmen or Fed Bank presidents).

And well-known PhD economist James Galbraith is ignored when he argues that - because fraud caused the economic crisis - economists should move into the background, and "criminologists to the forefront".

And of course, the PhD economists calling for a complete audit of the Fed or - heaven forbid - a challenge to Fed powers, are ignored.

In fact, as I pointed out in December, most economists don't exercise any independent thinking because economists are trained to ignore reality:

As I have repeatedly noted, mainstream economists and financial advisors have been using faulty and unrealistic models for years. See this, this, this, this, this and this.

And I have pointed out numerous times that economists and advisors have a financial incentive to use faulty models. For example, I pointed out last month:

The decision to use faulty models was an economic and political choice, because it benefited the economists and those who hired them.

For example, the elites get wealthy during booms and they get wealthy during busts. Therefore, the boom-and-bust cycle benefits them enormously, as they can trade both ways.

Specifically, as Simon Johnson, William K. Black and others point out, the big boys make bucketloads of money during the booms using fraudulent schemes and knowing that many borrowers will default. Then, during the bust, they know the government will bail them out, and they will be able to buy up competitors for cheap and consolidate power. They may also bet against the same products they are selling during the boom (more here), knowing that they'll make a killing when it busts.

But economists have pretended there is no such thing as a bubble. Indeed, BIS slammed the Fed and other central banks for blowing bubbles and then using "gimmicks and palliatives" afterwards.

It is not like economists weren't warning about booms and busts. Nobel prize winner Hayek and others were, but were ignored because it was "inconvenient" to discuss this "impolite" issue.

Likewise, the entire Federal Reserve model is faulty, benefiting the banks themselves but not the public.

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

The problems of a massive debt overhang were also thoroughly documented by Minsky, but mainstream economists pretended that debt doesn't matter.

And - even now - mainstream economists are STILL willfully ignoring things like massive leverage, hoping that the economy can be pumped back up to super-leveraged house-of-cards levels.

As the Wall Street Journal article notes:

As they did in the two revolutions in economic thought of the past century, economists are rediscovering relevant work.

It is only "rediscovered" because it was out of favor, and it was only out of favor because it was seen as unnecessarily crimping profits by, for example, arguing for more moderation during boom times.

The powers-that-be do not like economists who say "Boys, if you don't slow down, that bubble is going to get too big and pop right in your face". They don't want to hear that they can't make endless money using crazy levels of leverage and 30-to-1 levels of fractional reserve banking, and credit derivatives. And of course, they don't want to hear that the Federal Reserve is a big part of the problem.

Indeed, the Journal and the economists it quotes seem to be in no hurry whatsoever to change things:

The quest is bringing financial economists -- long viewed by some as a curiosity mostly relevant to Wall Street -- together with macroeconomists. Some believe a viable solution will emerge within a couple of years; others say it could take decades.

I think that the question that needs to be asked is how the discipline was untracked and trivialized from its classical flowering? How did it become marginalized and trivialized, taking for granted the social structures and dynamics that should be the substance and focal point of its analysis?...

To answer this question, my book describes the "intellectual engineering" that has turned the economics discipline into a public relations exercise for the rentier classes criticized by the classical economists: landlords, bankers and monopolists. It was largely to counter criticisms of their unearned income and wealth, after all, that the post-classical reaction aimed to limit the conceptual "toolbox" of economists to become so unrealistic, narrow-minded and self-serving to the status quo. It has ended up as an intellectual ploy to distract attention away from the financial and property dynamics that are polarizing our world between debtors and creditors, property owners and renters, while steering politics from democracy to oligarchy...

[As one Nobel prize winning economist stated,] "In pointing out the consequences of a set of abstract assumptions, one need not be committed unduly as to the relation between reality and these assumptions."

This attitude did not deter him from drawing policy conclusions affecting the material world in which real people live. These conclusions are diametrically opposed to the empirically successful protectionism by which Britain, the United States and Germany rose to industrial supremacy.

Typical of this now widespread attitude is the textbook Microeconomics by William Vickery, winner of the 1997 Nobel Economics Prize:

"Economic theory proper, indeed, is nothing more than a system of logical relations between certain sets of assumptions and the conclusions derived from them... The validity of a theory proper does not depend on the correspondence or lack of it between the assumptions of the theory or its conclusions and observations in the real world. A theory as an internally consistent system is valid if the conclusions follow logically from its premises, and the fact that neither the premises nor theconclusions correspond to reality may show that the theory is not very useful, but does not invalidate it. In any pure theory, all propositions are essentially tautological, in the sense that the results are implicit in the assumptions made."

Such disdain for empirical verification is not found in the physical sciences. Its popularity in the social sciences is sponsored by vested interests. There is always self-interest behind methodological madness. That is because success requires heavy subsidies from special interests, who benefit from an erroneous, misleading or deceptive economic logic. Why promote unrealistic abstractions, after all, if not to distract attention from reforms aimed at creating rules that oblige people actually to earn their income rather than simply extracting it from the rest of the economy?

As I have previously written, mainstream economists and financial advisors who promote flawed models are not necessarily bad people:

I am not necessarily saying that mainstream economists were intentionally wrong, or that they lied because it led to promotions or pleased their Wall Street, Fed or academic bosses.

But it is harder to fight the current and swim upstream then to go with the flow, and with so many rewards for doing so, there is a strong unconscious bias towards believing the prevailing myths. Just like regulators who are too close to their wards often come to adopt their views, many economists suffered "intellectual capture" by being too closely allied with Wall Street and the Fed.

As Upton Sinclair said:

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

This seems to be a return to the mindset of the middle ages where only the clergy were allowed to read and interpret the bible and the laity were presumed incapable of comprehending the intricacies and subtle nuances of the faith.

And indeed there is a great deal of similarity between economics and [fundamentalist version of] religion in that both depend on the unquestioning faith of the masses that those pretty printed pieces of paper represent something real, albeit invisible.

But the advent of the printing press led people to take a closer look at the actual content of [fundamentalist version of] religion and it has been revealed not as a complex and sophisticated system but as a mish-mash of half-baked myths and legends often in contradiction with itself and used to enrich the church ....

The same is true of eocnomics. the advent of the blog has led people to take a closer look at the actual content of economics and it has been revealed not as a complex and sophisticated system but as a mish-mash of half-baked theories and math often in contradiction with itself and used to enrich the bankers and conceal their fraud against the public. Athreya is reacting to the blogs the way [fundamentalist] priests reacted to Gutenberg's Printing Press.

The fraud and danger of the Federal Reserve system of banking stands exposed to the public eye, sans the "benefit" of correct interpretation by the self-appointed priests of Mammon. The public now understands that when a private bank issues the public currency at interest, debt will always exceed the available money supply. The public now understands that the Federal Reserve is no more Federal than Federal Express. The public now understands that the Federal Reserve is a legalized counterfeiting operation, that creates the money they loan out out of thin air! The public now understands that the Federal Reserve system of banking, since its creation in 1913, has reduced the value of a dollar down to about four cents! The public now understands that the Federal Reserve system is a pyramid scam that only works when ever larger populations of borrowers can be found, and that once an entire nation or planet has borrowed to the max, the system must crash (which is what is happening now).

Just as the [fundamentalist] priests, stripped of the arcane scriptures and rituals, stand exposed ... so too the economists, stripped of their arcane equations and theories, stand exposed ....

Karthik Athreya doesn't like that fact that the public sees the Federal Reserve for what it really is.

A team of scientists from the Energy Department discovered a new twist: Their sophisticated imaging equipment detected not one but two drill pipes, side by side, inside the wreckage of the well's blowout preventer on the bottom of the Gulf of Mexico.

BP officials said it was impossible. The Deepwater Horizon rig, which drilled the well, used a single pipe, connected in segments, to bore 13,000 feet below the ocean floor. But when workers cut into the wreckage to install a containment cap this month, sure enough, they found two pipes.

The discovery suggested that the force of the erupting petroleum from BP's well on April 20 was so violent that it sent pipe segments hurtling into the blowout preventer, like derailing freight cars.

It also offered a tantalizing theory for the failure of the well's last line of defense, the powerful pinchers called shear rams inside the blowout preventer that should have cut the pipe and stopped the rising oil and gas from reaching the Deepwater Horizon 5,000 feet above. Drilling experts say those rams, believed to be partially deployed, could have been thwarted by the presence of a second pipe.

The doubled-up drill pipe joins a list of clues that is helping scientists understand the complexities of the Deepwater Horizon accident, and from that, craft changes in how deep-water drilling is conducted.

"We still don't really know what's in" the well wreckage, said Energy Secretary Steven Chu, whose team discovered the second pipe using gamma-ray imaging. He added: "If there were two drill pipes down there when the shear rams closed, or two drill pipes below, is it possible that in the initial accident … there was an explosive release of force?…Did it buckle and snap?…The more we know about this, the better we can know what to do next."

While the DOE is only referring to drill pipe and not well casing, many experts have said that the well casing was destroyed also.

Indeed, the government is making back-up plans in case the relief wells don't work. As the New York Times reported yesterday:

BP and government officials are now talking about a long-term containment plan to pump the oil to an existing platform should the relief well effort fail. While such a failure is considered highly unlikely, the contingency plan is the latest sign that with this most vexing of engineering challenges — snuffing a gusher 5,000 feet down in the gulf — nothing is a sure thing.

***

Experts said it was conceivable that the “kill” procedure would not be effective, particularly if only a single relief well was used and the bottom of the well bore was damaged in the initial blowout. Pumping large quantities of erosive mud into the well could even end up damaging the well further, hindering later efforts to seal it.

“I won’t say there haven’t been relief wells that haven’t worked,” said a technician involved in the effort.

There are questions about the damaged well’s condition, particularly near the point where the interception would take place, and whether it could affect the kill procedure.

“No human being alive can know the answers,” said the technician, who spoke on condition of anonymity because he was not authorized to comment on the work.

Some say the Gulf of Mexico catastrophe can be linked to Congress' policy of oil-friendly tax breaks and financial benefits.

***

At issue was the 2005 Energy Policy Act — the largest energy bill in years. The committee chairman, Rep. Joe L. Barton (R- Texas), a friend of the industry, had saved some big issues for the end: billions of dollars in tax and royalty relief to encourage drilling for oil and gas in the Gulf of Mexico and other offshore areas. There was even a $50-million annual earmark to support technical research for the industry.

***

The royalty waiver program was established by Congress in 1995, when oil was selling for about $18 a barrel and drilling in deep water was seen as unprofitable without a subsidy. Today, oil sells for about $70 a barrel, but the subsidy continues.

The Government Accountability Office estimates that the deep-water waiver program could cost the Treasury $55 billion or more in lost revenue over the life of the leases, depending on the price of oil and gas and the performances of the wells.

***

Oil companies won a lawsuit last year requiring the government to pay back $2.1 billion in royalties from previous years, including about $240 million to BP.

An increasing number of analysts say the waiver program has pushed drilling into fragile and remote areas where emergency response plans were inadequate.

"If it wasn't profitable for them to do it, then that's a good argument for leaving the oil in the ground," said Robert Gramling, who studies the history of the oil industry at the University of Louisiana, Lafayette. The government-subsidized rush to deep-water exploration led to a situation where the industry was doing "things that were technically possible but were beyond our ability to undo them if we find out we have a problem."

But most people don't know that the government has actively encouraged drilling for methane in the Gulf of Mexico as well.

For example, Congress passed the Methane Hydrate Research and Development Act of 2000 "to promote the research, identification, assessment, exploration, and development of methane hydrate resources...."

The Energy Policy Act of 2005 also provided government support for methane hydrate research, exploration and development - including in deep water.

The Department of Energy has actively encouraged deepwater drilling for methane hydrates. See this and this.

Indeed, this has specifically included support for deepwater drilling for methane in the Gulf of Mexico. See this, this, this, this, this,

The oil emanating from the seafloor contains about 40 percent methane, compared with about 5 percent found in typical oil deposits, said John Kessler, a Texas A&M University oceanographer who is studying the impact of methane from the spill.

A U.S. scientist says that methane levels in the Gulf are "astonishingly high", that 1 million times the normal level of methane gas has been found in some regions near the oil spill, high enough to create "dead zones" devoid of life. Methane depletes oxygen, and the scientist noted:

At some locations, we saw depletions of up to 30 percent of oxygen based on its natural concentration in the waters.

Many scientists have said that methane releases have caused past warming spells. See this, this, this, this and this. Indeed, methane has such a powerful effect on climate that scientists believe that woolly mammothfarts gaseous emissions are responsible for warming the Earth 13,000 years ago.

The Siberian Shelf alone harbours an estimated 1,400 billion tonnes of methane in gas hydrates, about twice as much carbon as is contained in all the trees, grasses and flowers on the planet. If just one per cent of this escaped into the atmosphere within a few decades, it would be enough to cause abrupt climate change, says [Natalia Shakhova, a biogeochemist at the University of Alaska, Fairbanks, and one of the leaders of the Siberian Shelf study].

The new study, published in the journal Science, shows that methane emissions from the Arctic increased by 31% from 2003-07. The increase represents about 1 [million] extra tonnes of methane each year. Palmer cautioned that the five-year increase was too short to call a definitive trend.

***

[Researchers] found that just over half of all methane emissions came from the tropics, with some 20 [million] tonnes released from the Amazon river basin each year, and 26 [million] tonnes from the Congo basin. Rice paddy fields across China and south and south-east Asia produced just under one-third of global methane, some 33 [million] tonnes.

440 million metric tons of methane [are] emitted worldwide each year from a combination of human activities and natural sources like rotting plants in wetlands, termites and wildfires.

1 ton of liquefied methane equals approximately 16 barrels or 50,000 cubic feet of natural gas, depending on methane content (Natural gas contains between 75 and 90 percent methane by volume. Natural gas used by consumers is composed almost entirely of methane. However, natural gas found at the wellhead, although still composed primarily of methane, is not as pure. )

So using a rough calculation, 440 million metric tons equals approximately 2.2 × 1013 or 22,000,000,000,000 cubic feet.

That's 22 trillioncubic feet a year ... 210 times bigger than the amount of methane being released from the Gulf oil spill.

So the bottom line is that the methane gushing out from the broken oil equipment is adding to the worldwide methane output, but constitutes less than one-half of one percent ... which would normally be considered a statistical rounding error.

Remember, these are very rough estimates which are certain to be somewhat off. I hope that an expert can provide better estimates, and correct any erroneous assumptions which I made. But the estimates still provide some sense of scale and context.

(Note also that Iceland's volcanoes are probably going to throw a lot of ash into the air. This could have a cooling effect which offsets any warming from the Gulf methane release.)

Look Out Below!

Methane released deep underwater might not even make it to the atmosphere.

The latest science suggests that relatively little, if any, methane hydrate is currently degassing, amounting to at most 2 percent of global methane emissions, and much of that may not even be entering the atmosphere. Most of the degassing hydrate would be deep underwater, so the methane that’s released can get dissolved in the water or chewed up by certain microbes before it reaches the surface.

David Valentine of the University of California, Santa Barbara, agrees:

"Although methane from surface-vessel spills or shallow-water blowouts escapes into the air, I expect that the vast majority of methane making the long trip to the sea surface from a deep water spill would dissolve," Valentine wrote. "Unlike oil, methane dissolves uniformly in seawater. And the tools are available to measure it accurately and sensitively."

[A] study called Project “Deep Spill” ... debunks the lie that the methane gas being released from the well is floating to the surface and not being absorbed into the sea.

The study analyzed a wide range of controlled releases at different depths below the sea surface of different types of oil found all over world to help better understand the flow of hydrocarbons released from a deepwater blowout.

One of the studies, called DeepBlow, released 10,000 barrels of oil per day at a depth of 800 meters which is less than half of the depth of the Deepwater Horizon blowout.

The basic findings of that study has been recreated by scientists from the University of North Carolina.

None of the methane released from the deepwater blowout made it to the surface. The study found that released natural gas may dissolve completely within the water column if it is released from a deep enough depth relative to the gas flow rate.

From the study of the 800 meter release:

Echo sounders provided efficient tracking of oil and gas releases in the field and showed that the gas was completely dissolved before it could surface.

DeepBlow does not include hydrate kinetics, and hence, under hydrate forming conditions, the model predicts solid hydrate particles. Not only is the mass transfer from such particles slower than from gas bubbles, but also hydrate density is closer to that of water than that of natural gas, substantially reducing plume buoyancy.

The buoyant parts of the oil released in a deepwater blowout split from the main plume within the first 200 meters of release. Those buoyant parts, which represent only a small portion of the total amount of oil, turn into small droplets that float to the surface.

Here is a graph from the study showing this process.

Deepwater oil release – Buoyancy particle separation graph

Here is an image that captures the separation process

Deepwater oil release – Buoyancy particle separation simulation

Within the first 100 to 200 meters from the source of the release the the majority of the oil loses its buoyancy and stops rising. This majority of the oil remains submerged in an underwater plume that is then carried away by subsurface currents.

The fact that much of the methane released from the Gulf oil spill won't make it to the surface is good for those worried about global warming, but bad for the marine life. Remember as discussed above, methane depletes oxygen, and thus kills everything in the ocean.Methane Explosions

There is speculation on the Web that the methane being released from the oil spill will cause a tsunami or a firestorm.

It is true that one scientist speculatesthat methane bubbles released from the seafloor have caused extinction-level events in the past. However, the scientist is nottalking about the type of methane - methane hydrates - which are being released by the oil spill.

In fact, the odds that the release of methane from the leaking oil will cause a tidal wave or a firestorm are infinitesimally small.

There are many real things to worry about - such as the destruction of the Gulf ecosystem, and the threat to human health from toxic chemicals in the oil and dispersants.

Tidal waves and firestorms are not worth worrying about. And - unlike the destruction of the ecosystems and the threat to human health which we can do something about (by stopping the use of Corexit dispersant and using proven clean-up and containment methods) - there's nothing much we can do about such low-probability Armageddon scenarios.

Note: BP should be careful, however, if it attempts to use explosives to seal the well.

Monday, June 28, 2010

Dick Snyder, director of the Center for Environmental Diagnostics and Bioremediation at the University of West Florida, began conducting water samples May 3 on Pensacola Beach every Tuesday and Thursday because beach and health officials were only doing visual assessments.

What you can't see in the water may be more dangerous than what you can see, he said.

"That's why we thought we had to start looking for dissolved oil," he said.

It can't been seen and it poses health risks. So far it's not been found in the surf zone on the beach. But water samples taken Thursday in the surf zone, where most people swim, at Casino Beach, did reveal small amounts of alkanes, hydrocarbon molecules found in oil, he said.

And as Paul Montagna - Endowed Chair for Ecosystems Studies and Modeling at the Harte Research Institute for Gulf of Mexico Studies, Texas A&M University-Corpus Christi - notes, new oil will keep on dissolving in the water for decades:

The large, long-term danger may be from the oil that is stranded on the bottom. The deep sea is about the same temperature as your refrigerator, so bacteria will not be able to break down the oil, and we can expect tar balls to emanate from this area for decades to come.

This also means that the disaster will continue for a decade or two as the oil within the environment continues to break down, dissolve and move back into the surface waters. Even though smaller amounts will be released in the future, it will still have population-level effects because the juvenile stages of all marine animals are much more sensitive to toxins than adults. The lost juveniles will have a ripple effect throughout marine populations because there will be fewer adults in future generations to reproduce and replenish the lost animals.

Children should be directly supervised and should not be allowed to play in or around areas where the water or beach contains oil or sludge.

Children, and whenever possible teens, should not be involved in clean-up efforts but should only return after the area is cleaned up. Children should be the last group to return to areas impacted by oil or other toxic substances.

Children should not be involved in swimming, boating, or clean-up activities in areas impacted by the oil spill.

But as Andrew Gavin Marshall points out, the elites are actually terrified of the mass political awakening which is occurring worldwide.

Marshall collects quotes from flexianZbigniew Brzezinski - Obama's former foreign affairs adviser, National Security Adviser to President Carter, creator of America's strategy to lure Russia into Afghanistan, and creator of America's plans for Eurasia in general - to make his point.

Listen to Brzezinski's own words (consolidated from various writings and speeches, and edited as if they were a single passage):

For the first time in history almost all of humanity is politically activated, politically conscious and politically interactive. Global activism is generating a surge in the quest for cultural respect and economic opportunity in a world scarred by memories of colonial or imperial domination.

For the first time in human history almost all of humanity is politically activated, politically conscious and politically interactive. There are only a few pockets of humanity left in the remotest corners of the world that are not politically alert and engaged with the political turmoil and stirrings that are so widespread today around the world. The resulting global political activism is generating a surge in the quest for personal dignity, cultural respect and economic opportunity in a world painfully scarred by memories of centuries-long alien colonial or imperial domination.

America needs to face squarely a centrally important new global reality: that the world's population is experiencing a political awakening unprecedented in scope and intensity, with the result that the politics of populism are transforming the politics of power. The need to respond to that massive phenomenon poses to the uniquely sovereign America an historic dilemma: What should be the central definition of America's global role?

[T]he central challenge of our time is posed not by global terrorism, but rather by the intensifying turbulence caused by the phenomenon of global political awakening. That awakening is socially massive and politically radicalizing.

It is no overstatement to assert that now in the 21st century the population of much of the developing world is politically stirring and in many places seething with unrest. It is a population acutely conscious of social injustice to an unprecedented degree, and often resentful of its perceived lack of political dignity. The nearly universal access to radio, television and increasingly the Internet is creating a community of shared perceptions and envy that can be galvanized and channeled by demagogic political or religious passions. These energies transcend sovereign borders and pose a challenge both to existing states as well as to the existing global hierarchy, on top of which America still perches.

The youth of the Third World are particularly restless and resentful. The demographic revolution they embody is thus a political time-bomb, as well. With the exception of Europe, Japan and America, the rapidly expanding demographic bulge in the 25-year-old-and-under age bracket is creating a huge mass of impatient young people. Their minds have been stirred by sounds and images that emanate from afar and which intensify their disaffection with what is at hand. Their potential revolutionary spearhead is likely to emerge from among the scores of millions of students concentrated in the often intellectually dubious "tertiary level" educational institutions of developing countries. Depending on the definition of the tertiary educational level, there are currently worldwide between 80 and 130 million "college" students. Typically originating from the socially insecure lower middle class and inflamed by a sense of social outrage, these millions of students are revolutionaries-in-waiting, already semi-mobilized in large congregations, connected by the Internet and pre-positioned for a replay on a larger scale of what transpired years earlier in Mexico City or in Tiananmen Square. Their physical energy and emotional frustration is just waiting to be triggered by a cause, or a faith, or a hatred.

Politically awakened mankind craves political dignity, which democracy can enhance, but political dignity also encompasses ethnic or national self-determination, religious self-definition, and human and social rights, all in a world now acutely aware of economic, racial and ethnic inequities. The quest for political dignity, especially through national self-determination and social transformation, is part of the pulse of self-assertion by the world's underprivileged

The misdiagnosis [of foreign policy] pertains to a relatively vague, excessively abstract, highly emotional, semi-theological definition of the chief menace that we face today in the world, and the consequent slighting of what I view as the unprecedented global challenge arising out of the unique phenomenon of a truly massive global political awakening of mankind. We live in an age in which mankind writ large is becoming politically conscious and politically activated to an unprecedented degree, and it is this condition which is producing a great deal of international turmoil.

That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness. It may be undefined, it may point in different directions, it may be primitive, it may be intolerant, it may be hateful, but it is a form of political activism.

The other major change in international affairs is that for the first time, in all of human history, mankind has been politically awakened. That is a total new reality – total new reality. It has not been so for most of human history until the last one hundred years. And in the course of the last one hundred years, the whole world has become politically awakened. And no matter where you go, politics is a matter of social engagement, and most people know what is generally going on –generally going on – in the world, and are consciously aware of global inequities, inequalities, lack of respect, exploitation. Mankind is now politically awakened and stirring. The combination of the two: the diversified global leadership, politically awakened masses, makes a much more difficult context for any major power including, currently, the leading world power: the United States.

The people of the world are waking up to the reality of what is happening. If we wake up fast enough, we can reclaim our power and dignity, and shake off those who would steal everything we have, including our money, opportunity and freedom.

To see the context of Brzezinski 's quotes - and for a great analysis of the ways in which the powers-that-be are trying to counter the mass awakening, read Marshall's essay.

BP is given advanced warning when an official is going to show up to any place where there is oil. All assets are deployed. As soon as the official leaves, 75-80% of the assets are removed. BP calls it a "pony and balloons" show.

"We are expendable to these people. We do not matter."

They're not cleaning it up, they're covering it up.

BP is making it impossible for clean-up workers to wear respirators.

She saw hundreds of thousands of fish dying, so disoriented by the oil that they crashed into her boat.

There is a media blackout.

If the country does not stand up and say "no more", this will go global. All of the world's oceans are connected. If not stopped, it will destroy one-third of the world's water.

Former clean-up worker Candy Morris also said the clean-up efforts are just for show, are only cosmetic, and are just for the cameras:

Nigeria has next to no protections for its people, and so it has been trashed.

The government is bought and paid for by giant corporations to rape and pillage at will instead of working for its own people.

For example, the government, Shell and Chevron support paramilitary "kill and go" squads which brutally murder people who protest the wholesale destruction of their homes and environs for oil extraction, especially since the people get almost no share in the oil profits.

The proud country of America has been turned into the United States of Nigeria.

While there are no paramilitary death squads in America (although such squads are used by the U.S. government against American citizens abroad - and see this), there are many other similarities.

BP is destroying the Gulf, because the government has supported BP without regulating it in any meaningful way.

After nearly 20 hours over two final days filled with backroom dealing, House and Senate negotiators struck a grand compromise to merge the two chambers’ competing bills to reform the nation’s financial system in a party-line vote. But the long hours of closed-door meetings also appear to have fulfilled Wall Street’s greatest wish: Many of the measures that offered the greatest chances to fundamentally reshape how the Street conducts business have been struck out, weakened, or rendered irrelevant.

Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University, said additional leaks are a possible source of deep-sea plumes of oil detected by research vessels. But this part of the gulf is pocked with natural seeps, he noted. Conceivably the drilling of the well, and/or the subsequent blowout, could have affected the seeps, he said.

"Once you started disturbing the underground geology, you may have made one of those seeps even worse," he said.

Remember that geologists have said that if the well casing is substantially breached, the oil and methane gas will find a way through fractures in the surrounding geology and make it into the ocean. For example, the Houston Chronicle notes:

If the well casing burst it could send oil and gas streaming through the strata to appear elsewhere on the sea floor ....

Obviously, if there are natural oil or gas seeps nearby, there are already pre-existing channels up to the seafloor ... so that may very well be the path of least resistance for the subterranean oil to flow up to the seafloor.

Therefore, if there were a substantial breach in the well bore, nearby natural oil and gas seeps could very well increase in volume.

Because BP would like to minimize leak estimates to minimize the damages it has to pay under the Clean Water Act, BP would undoubtedly try to pretend that the nearby natural seeps always had the same volume. In other words, the owner of the oil drilling prospect where the spill is occuring - BP - may be the only party to have mapped out the nearby seeps (Anadarko and Mitsui were partners with BP in the oil prospect; but - as passive partners - they probably didn't take a hands-on approach to such details).

So don't be surprised if - when formerly tiny seeps become gushers - BP tries to pretend that they were always that large.

Indeed - given BP's track record of prevarication - don't be shocked if BP pretends that brand new gushers are ancient, natural seeps.

The question is whether there is enough mechanical structure left at the base of the reservoir to hold the cement when they start pouring cement in [from the relief well].

***

The more oil we some coming out, the more it tells you that the whole casing system is deteriorating. The fact that more oil would be coming out rather than less oil, would suggest that the construction within the pipe is offering no resistance whatsoever, and we’re just getting a gusher.

Newsweek gives a balanced view regarding the risk of a total structural failure of the well:

The likelihood of a complete collapse is difficult to assess, in part, engineers and legislators say, because BP hasn’t shared enough information to evaluate the situation. But a handful of clues suggest that the company is concerned. On Friday, BP spokesperson Toby Odone acknowledged that the 45-ton stack of the blowout preventer was tilting noticeably, but said the company could not attribute it to down-hole leaks. “We don’t know anything about the underground portion of the well,” he said. But, the stack “is tilting and has been tilting since the rig went down. We believe that it was caused by the collapse of the riser.” The company is monitoring the degree of leaning but has not announced any plans to run additional supports to the structure.

As many have speculated ... concerns over structural integrity are what led BP to halt “top kill” efforts late last month. When it was digging this particular well, the company ran out of casing–the pipe that engineers send down the hole–and switched to a less durable material called liner. This may have created several weak spots along the well that would be particularly vulnerable to excessive pressure or erosion. So instead of sealing the well, the company has been focused on trying to capture the oil as it flows out the top.

At this point, some experts say, additional leaks wouldn’t matter much. “It’s very possible that there are subfloor leaks,” says [Roger Anderson - an oil geophysicist at Columbia University]. “But that doesn’t change the strategy moving forward.” The linchpin of that strategy involves drilling relief wells that would absorb all possible leaks, both at the top and the bottom of the hulking, teetering structure. Relief wells are drilled straight down into the sea bottom. After running parallel to the existing well for a few thousand meters, they cut in and intersect the original well bore. BP is drilling two such wells, one on either side of the main well. Once they are complete, the company will use them to pump heavy fluid and cement into the main well, stopping the oil at its source. The approach usually has a 95 percent success rate.

But to work, the well must be sealed as far down as possible–if it’s sealed too high, oil could still escape through any leaks beneath the seal. In this case, relief wells will have to drill down to 5,500 meters, and that takes time, at least until August. The real question now is whether the entire structure can hold out long enough.

One of the dangers which the relief wells are racing against is that the blowout preventer (BOP) is leaning ... and might fall over.

The well casing itself is attached to the BOP. And - as discussed below - the BOP is very heavy. So if the BOP fell over, it would likely severely damage the structural integrity of the casing.

In a press teleconference Monday, National Incident Commander Thad Allen announced that the riser package is tilting “10 or 12 degrees off perpendicular,” twice the 5.5 degree tilt of the Leaning Tower of Pisa:

The entire arrangement is kind of listed a little bit. I think it’s 10 or 12 degrees off perpendicular so it’s not quite straight up.

The integrity of the well has become a major topic of discussion among engineers and geologists.

"Everybody's worried about all of this. That's all people are talking about," said Don Van Nieuwenhuise, director of geoscience programs at University of Houston. He said the things that BP has being doing to try to stop the oil or gain control of it have been tantamount to repeatedly hitting the well with a hammer and sending shock waves down the pipe. "I don't think people realize how delicate it is."

"There is a very high level of concern for the integrity of the well," said Bob Bea, the University of California Berkeley engineering professor known to New Orleanians for investigating the levee failures after Katrina, who now has organized the Deepwater Horizon Study Group. Bea and other engineers say that BP hasn't released enough information publicly for people outside the company to evaluate the situation.

***

When wells are drilled, engineers send links of telescoping pipe down the hole, and those links are encased in cement. The telescoping pipe, called casing, unfolds like a radio antenna, only upside down, so the width of pipe gets smaller as the well gets deeper.

The cement and layers of casing are normally quite strong, Van Nieuwenhuise said. But with the BP well, there are several weak spots that the highly pressurized oil could exploit. BP ran out of casing sections before it hit the reservoir of oil, so it switched to using something called liner for the remainder of the well, which isn't as strong. The joints between two sections of liner pipe and the joint where the liner pipe meets the casing could be weak, Van Nieuwenhuise said.

Bill Gale, an engineer specializing in fires and explosions on oil rigs who is part of Bea's Deepwater Horizon Study Group, said the 16-inch wide casing contains disks that are designed to relieve pressure if necessary. If any of those disks popped, it could create undesirable new avenues for the oil to flow.

Bea said there are also concerns about the casing at the seabed right under the blowout preventer.

Van Nieuwenhuise said he's never actually heard of oil from a blown out well rupturing the casing and bubbling up through the ocean floor. He would consider that an unlikely, worst-case scenario.

A more likely problem, he said, is that oil could find its way into open spaces in the casing string, known as the annulus, and travel up the well in areas where it isn't supposed to be. This scenario could be one reason why more oil than expected is flowing at the containment cap that BP installed earlier this month to collect the oil.

Bea is more concerned about the worst-case scenario than Van Nieuwnhuise. In an answer to a question, Bea said, "Yes," there is reason to think that hydrocarbons are leaking from places in the well other than the containment cap.

"The likelihood of failure is extremely high," Bea said. "We could have multiple losses of containment, and that's going to provide much more difficult time of trying to capture this (oil)."

Meanwhile, observers monitoring the video feeds from the robotic vehicles working on the sea floor have noticed BP measuring a tilt in the 40-ton blowout preventer stack with a level and a device called an inclinometer.

***

Bea said BP isn't sharing enough information for others to know. If there is oil and gas escaping from the sides of the well, it could erode the sediments around the well and eat away at the support for all the heavy equipment that sits above. Bea said reports that BP is using an inclinometer is significant news. "It tells me that they are also concerned," he said.

Money-saving measures BP took while designing the Macondo well in the Gulf of Mexico appear to have dogged efforts to bring the massive oil spill under control.

Documents released by congressional investigators show that modifications to the well design BP made last year included a reduction in the thickness of a section of the casing — steel piping in the wellbore

The modification included a slight reduction in the specified thickness for the wall of a 16-inch-diameter section of pipe toward the bottom of the well, according to a May 14, 2009, document.

***

The condition of the well also limits how much oil and gas can flow into containment systems now being used successfully to capture some of the flow. Even if a vessel could capture all the hydrocarbons gushing from the well, some would have to be released to keep well pressure under control.

Marvin Odum, president of Houston-based Shell Oil, the U.S. arm of Royal Dutch Shell, told the Houston Chronicle last week that the integrity of the well casing is a major concern. Odum and others from the industry regularly sit in on high-level meetings with BP and government officials about the spill.

If the well casing burst it could send oil and gas streaming through the strata to appear elsewhere on the sea floor, or create a crater underneath the wellhead - a device placed at the top of the well where the casing meets the seafloor - that would destabilize it and the blowout preventer.

The steel casing used in oil wells is strong, said Gene Beck, petroleum engineering professor at Texas A&M, but pressures deep in a well are powerful enough to split strong steel pipe or "crush it like a beer can."

The strength and thickness of casing walls are key decisions in well design, he said. If the BP well's casing wasn't strong enough, it may already be split or could split during a containment effort.

BP spokesman Toby Odone said the decision to reduce the pipe thickness was made after careful review. The company said it doesn't know the condition of the well casing and has no way of inspecting it.

BP is drilling two relief wells to intercept the Macondo well near the reservoir and plug it with cement. A rupture in the Macondo well casing probably wouldn't affect that effort, said Donald Van Nieuwenhuise, director of geoscience programs at the University of Houston.

"When they start the bottom kill the cement will try to follow oil wherever it's escaping, so it would actually hide a lot of sins in the well bore," Van Nieuwenhuise said.

So far there are no signs that the section of the pipe below the sea floor is leaking.

The blowout preventer has been listing slightly since the accident, but officials believe that may have happened when the Deepwater Horizon sank while still attached to the well via a pipe called a riser.

***

But the longer the well flows uncontrolled the more likely it is that the well casing could be damaged or the blowout preventer damaged further. Sand and other debris that flows through the pipes at high velocity can wear through metal over time, said Van Nieuwenhuise.

The chances of the well eroding from underneath and the blowout preventer tipping may seem unlikely.

"But everything about this well has been unlikely," said David Pursell, an analyst with Tudor Pickering Holt & Co

Indeed, oil industry expert Rob Cavnar says that he wouldn't be surprised if the BOP ended up falling over entirely:

Shira Kramer, an epidemiologist who has conducted research for the petroleum industry on the health consequences of exposure to petroleum, said she is concerned that the risks are being downplayed.

“It’s completely scientifically dishonest to pooh-pooh the potential here when you are talking about some of the most toxic chemicals that we know,” said Kramer....

“When you talk about community exposure, you are talking about exposures in unpredictable ways and to subpopulations that may be more highly susceptible than others, such as those of reproductive age, people who are immuno-compromised, children or fetuses.

‘With the World Trade Center, there have been unpredictable adverse health effects to the populations that were exposed and not just the workers,” she said. “In this case, we have a soup of chemicals from the crude, chemicals from the dispersants and pollutants that were already in the water. Who can say how they will interact?”

In addition, BP has poured millions of gallons of the highly-toxic dispersant Corexit into the Gulf. And see this.

Bloomberg also notes that the Centers for Disease Control has issued health warnings about the oil:

“Although the oil may contain some chemicals that could cause harm to an unborn baby under some conditions, the CDC has reviewed sampling data from the EPA and feels that the levels of these chemicals are well below the level that could generally cause harm to pregnant women or their unborn babies,” the CDC said on its website.

While they suggest there is no threat, the CDC simultaneously advised “everyone, including pregnant women” to avoid spill-affected areas.

While we must keep the risk in perspective - and while this does notmean that Gulf coast residents will suffer mass illness due to the oil spill - we should not underestimate the risks either. As Bloomberg notes:

“Oil is a complex mixture containing substances like benzene, heavy metals, arsenic, and polynuclear aromatic hydrocarbons -- all known to cause human health problems such as cancer, birth defects or miscarriages,” said Kenneth Olden, founding dean of New York’s CUNY School of Public Health at Hunter College, who is monitoring a panel on possible delayed effects. “The potential here is huge and we have to be diligent about protecting the public health and these workers.”

For the public at large, the threat is less clear because of the uncertainty about the degree of exposure, Lioy said in a telephone interview.

“I don’t think the levels are high enough for concern,” he said. “But this is an ongoing event. Every day is Day One. Every place can be Ground Zero.”

Tuesday, June 22, 2010

Congressman Markey - who chairs the select committee on Energy Independence and Global Warming and the Energy and Environment subcommittee - alleges:

What’s clear is that BP has had an interest in low-balling the size of their accident, since every barrel spilled increases how much they could be fined by the government.

Markey and many others point to the fact that BP's fines under the Clean Water Act are based on how many barrels of oil have spilled.

It is therefore not very surprising that BP is pretending that it is difficult to measure the amount of oil spilling into the Gulf.

But a commenter at the Oil Drum points out that BP had the technology to accurately measure the amount of oil spilling into the Gulf - without damaging any equipment - 2 years ago (edited for readability):

Would it surprise anyone to know that BP had already developed the technology to accurately measure troublesome oil and gas flow mixtures at the well head two years ago? It can be done remotely and continuously, at up to 10,000 feet, with a clamp-on, calibration free, sonar flow meter, or that the company that sells and installs them is presenting at petroleum conventions in Calgary and Newfoundland this summer?

The reason BP does not want the true flow known, is that it would require them to pay the "legitimate" fines and royalties they owe on what is extracted, regardless of whether it is ever recovered. As of mid-June their violations of the Clean Water Act alone are around $10B.

The reason no other oil driller wants it known, is that they may own the next blowout and will also want to conceal their true obligations.

Expro’s latest deepwater intervention technology will be showcased at both events. Expro’s AX-S system will break new ground in subsea well intervention when it comes to the market.

AX-S™ (pronounced ‘access’) brings cost-effective, riser-less intervention to deepwater wells (up to 10,000ft of water). Expro’s goal is to deliver a full range of wireline intervention services in deepwater wells at substantially less than the cost of using a rig.

***

Expro Meters offers wellhead surveillance on demand, utilizing a range of clamp-on sonar-based metering technology. Expro offers round-the-clock, 24/7 well surveillance, on any well type or location. Expro’s meters are clamp-on, non intrusive, easily installed and applied without production shutdown, providing operators with a permanent solution to their wellhead production surveillance needs.

Expro Meters are also available on demand to provide quick and easy well testing services through our portable clamp-on meters – anywhere in the world.

And the following document - on BP's own website - contradicts everything they have said about not being able to accurately measure the rate of their Gulf oil leak (excerpt from p. 5 of BP's own Frontiers publication, August, 2008):

BP has identified that by combining sonar flow measurement with additional measured parameters, such as pressure drop in a flow line, both the liquid rate and the gas rate on a wet gas flow line can be determined. BP has proven this additional breakthrough in practice and expects to deploy the technique in the field by the end of this year.

It appears that measuring hydrocarbon flows which contain small but troublesome percentages of liquids or gas may be less problematic in the future thanks to BP's creative vision for sonar flow measurement.

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